COMMERCIAL UMBRELLA / EXCESS LIABILITY INSURANCE
The commercial umbrella/excess policy is designed to protect against catastrophic losses. It is usually written as a specified limit which sits over other primary liability policies—for example: the business auto policy, the commercial general liability policy, and employers liability. The umbrella/excess policy serves three purposes: it provides excess limits when underlying liability policies have been exhausted by the payment of claims; it drops down and picks up where underlying policies leave off when the aggregate limit of an underlying policy is exhausted; and it provides coverage for some claims that are not covered by underlying policies.
Here’s what you need to know about commercial umbrella and excess liability insurance:
There are very few true umbrella policies left in the current insurance marketplace. A true umbrella policy would provide broader coverage than what is found in the underlying policies and would become primary when underlying aggregates are exhausted.
Most policies today are called, Follow Form Excess Policies. This means that the excess policy follows the exact terms that are written into the underlying policies. The policies are generally excess over the commercial general liability, commercial auto policy and the employers liability section of the workers compensation policy.
Your umbrella/excess policy has nothing to do with your property policy. Underinsuring your property exposure will never be picked up by an umbrella/excess policy.
The self-insured retention is not necessarily a deductible. The self insured retention is the amount that the insured is responsible for but only applies in certain loss situations. It comes into play when a claim is not covered by an underlying policy but is payable under the excess policy.